22 February 2013
The following matter needs to be examined supported by the case laws and the provision of income tax act & wealth tax act, from four different viewpoints to check · The incidence of capital gain, · The availability of exemption u/s 54 or 54F of income tax act, 1961 & · The implication of wealth tax act on below mentioned issues.
Issue No.1 An assessee has a vacant plot. He has constructed a four-story building on that plot. He sold 3rd and 4th floor for Rs. 35 lakhs each.
Issue No.2 The assessee has a vacant plot. The said plot has been handed over to a builder to construct a four-story building under joint development agreement. As per this agreement the builder will get 3rd and 4th floor as consideration.
Issue No. 3 The assessee has a one story building constructed on the said plot. The assessee has demolished the building and handed over to builder. Rest facts are similar to issue No. 2.
Issue No. 4 The assessee has a one story building constructed on the said plot. The assessee has handed over the building alongwith plot to builder. Rest facts are similar to issue No. 2.
22 February 2013
Issue 1: Once the building is constructed on the plot then the plot becomes the property of the association. You have to find out on the date of giving possession that whether the plot was purchased 3 years before or not for the purpose of long term and short term capital gains.
Then you have to find out the market value of plot on the date of sale of residential house and from that market value you have to deduct cost of plot for finding Long term capital gain.
The sale of resi. house after constructing it is a business activity and hence the gains from it would be taxable under business and profession.
You have to calculate the total cost of redidential house and from that deduct the purchase price of plot in (proportionate amount) and then you can find out cost of sale. Thanks and regards.
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